KIEV, October 20 (Itar-Tass) —— Ukraine and the Customs Union countries are engaged in a normal and respectful dialogue, Ukrainian President Viktor Yanukovich said.

“There is no conflict between us. We are engaged in dialogue,” he said.

The president said, “Ukraine is a WTO member, while Russia and Kazakhstan are in the process of accession to this international organisation. As soon as they enter the WTO and the Customs Union has its rules in place and working, we will look at its effectiveness.”

“If the Customs Union meets [our] national interests, we will decide then,” he added.

Yanukovich stressed, “We want to look into the future consciously and intelligently”.

He is confident that Ukraine “has time and no one is hurrying us”.

The head of state noted normal relations “between our countries, which we build with respect for each other”.

“We are working on these documents [on Ukraine’s access to the Customs Union by the “3+1” formula] practically every day. Work is now underway at the level of authorised representatives of the governments of Russia and Ukraine. And our president will discuss them with the president of Russia tomorrow,” Prime Minister Nikolai Azarov said in August.

According to the prime minister, the “3+1” formula can be filled with real substance. “We have an interest in a number of agreements that have already been formed in the Customs Union, and we are working on these agreements right now,” he said.

Yanukovich said that Ukraine should sign a framework agreement with the Customs Union and then fill it with substance. “We are greatly interested to be in the Customs Union. But there are many different reasons why we are not making or considering such decision now,” the president said. “We have determined the format of Ukraine’s relations with the Customs Union – ‘3+1’. And we think that we should now sign a framework agreement and then fill it with substance.”

Putin said earlier he was hoping for progress in Ukraine’s accession to the Customs Union.

“We cannot say yet what kind of decisions we can make, but I hope that we will see noticeable and important steps, useful for all parties to this process,” he said.

Putin discussed this issue with Ukrainian President Viktor Yanukovich by telephone in the morning. “Government experts are working on the ‘3 + 1’ pattern proposed by our Ukrainian friends – three members of the Customs Union plus Ukraine,” he said.

Yanukovich has created a working group on interaction with the Customs Union formed by Russia, Belarus and Kazakhstan.

The president appointed Foreign Minister Konstantin Grishchenko its head.

Yanukovich instructed the working group to “draft and submit, within two months, suggestions concerning a strategy of interaction between Ukraine and the Customs Union of Russia, Belarus and Kazakhstan in the ‘3 + 1’ format”, the presidential press service said earlier.

Participation in the Customs Union and ultimately in the Common Economic Space (CES) in the CIS will allow Ukraine to increase its trade turnover by nine billion U.S. dollars a year, Customs Union Commission Secretary Sergei Glazyev said earlier.

“We have been working with a common system of customs tariffs, sanitary and phytosanitary control for the second year. During this time we have seen interregional cooperation doubled. Overall trade turnover of the Customs Union has increased by more than one-third,” he said.

According to Glazyev, the next stage will be the creation of the Common Economic Space and a transition to a common market of capital, services and labour.

“Ukraine was at the start of the CES, and we hope very much for a resumption of Ukraine's full-scale participation in these processes,” Glazyev said.

“We take President Yanukovich's 3+1 formula as a resumption of Ukraine's participation in the creation of the CES,” he said, referring to Yanukovich's proposal to develop cooperation between his country and the Customs Union in the “3+1” format.

Ukrainian Prime Minister Azarov said that the signing a free trade zone agreement with the EU and a free trade zone agreement with the Customs Union of Belarus, Russia and Kazakhstan are vitally important for Ukraine.

He stressed that cooperation with both the East and the West was important for Ukraine because trade turnover with Russia made up 30 percent and that with EU countries was also almost 30 percent.

“Ukraine is in an interesting situation. Geographically, we are surrounded in then east by the Customs Union of Belarus, Russia and Kazakhstan, and in the west by the European Union, which is also a customs union. So Ukraine is in a ring between two customs unions,” the government press service quoted Azarov as saying.

European Commission President Jose Manuel Barroso said earlier that Ukraine’s cannot be a member of the Customs Union and a free trade zone with the European Union at the same time.

It is impossible to join the Customs Union and at the same time have all-embracing free trade zone with the EU, Barroso said at a briefing after talks with Yanukovich in mid-April.

At the same time, he does not rule some instruments for cooperation between Ukraine and the Customs Union created by Russia, Belarus and Kazakhstan.

It would be hard for Ukraine to conduct negotiations on an advanced and all-embracing free trade zone with the EU if it joined the Customs Union of the three countries that have no preferential trade agreements with the EU because the Customs Union applies a common tariff to other partners, Barroso said.

In his opinion, Ukraine can sign such trade agreements that meet its economic interests and priorities.

However Yanukovich believes that Ukraine’s cooperation with the Customs Union will not be an obstacle to a free trade zone with the EU.

“I am convinced that the creation of mechanisms of cooperation between Ukraine and the Customs Union will not obstruct the creation of a free trade zone with the EU and in the future will facilitate European integration processes in Eurasia,” the president said.

“We are looking for mechanisms of cooperation and we think that we can reach an agreement that will allow us to cooperate with the Customs Union to the degree to which Ukrainian laws and our obligations to international organisations such as the WTO allow us,” the president said.